Recommendation for Defense – A.1. Steak SauceFrom: Carly Redmond-DurstTo: Dr. Hirmal BarksdaleDate: Tuesday, February 14, 2017Subject: Recommendation For Defense – A.1. Steak SauceSituation Analysis(i) IndustryExhibit A shows that current market share for Kraft’s A.1. Steak Sauce is over half of the industry at 54%. The next leading competitor is Heinz at 16% (Exhibit A). The industry is dominated primarily by A.1. Steak Sauce and has been for years.
However, Lowry’s is introducing a new steak sauce into the industry with very similar ingredients, look and taste.$305,555,554 industry sales approximated for 2003102,778,124 units sold approximated for 2003There is competition for the Publix Memorial Day advertisement due to this product line extensionPublix ad will be for 2-for-$5 bottles of Lowry’s steak sauceLowry’s is expected to acquire 10% of market share at most (A.1 Case, 2004)New customers will more likely focus on price than taste when choosing(ii) CompanyKraft’s A.1. Steak Sauce was first sold in the early 1900’s where it quickly became the industry leader with higher brand awareness than any other sauce to this day (A.1. Steak Sauce Case, 2004). A.1. Steak Sauce and Marinades is the portfolio we are working with.
Lowry’s is expected to enter a partnership with T.R.I., to acquire T.R.I. & the St. Louis Stock Exchange. This transaction is expected to generate about 1 billion (US$1.25 billion) in investment, and thus generate $2 billion in capital expenditure for the company (A.1 Case, 2005). If this partnership is successful and Lowry’s Steak Sauce can reach 1 billion customers by the end of 2005 it is anticipated that T.R.I. could generate 1 billion dollars (US$1.2 billion) through this move.
Purchasing of Lowry’s Steak Sauce from T.R.I.
We are exploring a potential partner (Cultivate) that can integrate the existing assets of its company and, if we will acquire this business to leverage it, create an even-er for CompanyKraft Steaks, which we believe will be a compelling alternative, for the same reasons why I believe Lowe’s Steak Sauce will be an economic opportunity for CompanyKraft as well.Our investors have expressed an interest in acquiring Lowry and we are now actively considering any alternative acquisition in any way that can offer Lowry better quality and taste and not risk the expense of acquiring Lowry.
A.1 Case, 2006: Lowry’s Steak Sauce
A.1 Case & Company. This IPO was initiated in order to evaluate available market research. Lowry currently makes available this product to more than 3,500,000 consumers in its stores who are in the United States; it consists of three sauces under its name, and its market share in the retail retail market in the United States is over 37 percentage points higher than that of the non-refurbished A.1 Case. We believe in Lowry’s ability to serve consumers well, to be a profitable brand in the future. In 2004, our principal focus was a wide range of sauces and specialties, including Steak Sauce, which includes a variety of Steaks for Kids® and Family Meal and Grilled Steak Sauce in the form of Chiles Chiles, and the Pepper Jack Steak Sauce in the form of Red Hot and Hot Pepper. In our primary focus was high-quality products and high level of customer loyalty, with prices competitive with these other products (a.1 Case, 2006b). Our primary focus in June/September 2004 was to acquire L.P. from a mutual partner (L.Y.E.) in order to increase marketing, as well as sales, prospects and success as a competitive brand in the future. This IPO was completed in October 2006. The portfolio of assets acquired and the purchase prices and market share increased during our first quarterly quarter of 2004 (i.e. in the second quarter of 2007). The purchase prices per share
Lowry’s is expected to enter a partnership with T.R.I., to acquire T.R.I. & the St. Louis Stock Exchange. This transaction is expected to generate about 1 billion (US$1.25 billion) in investment, and thus generate $2 billion in capital expenditure for the company (A.1 Case, 2005). If this partnership is successful and Lowry’s Steak Sauce can reach 1 billion customers by the end of 2005 it is anticipated that T.R.I. could generate 1 billion dollars (US$1.2 billion) through this move.
Purchasing of Lowry’s Steak Sauce from T.R.I.
We are exploring a potential partner (Cultivate) that can integrate the existing assets of its company and, if we will acquire this business to leverage it, create an even-er for CompanyKraft Steaks, which we believe will be a compelling alternative, for the same reasons why I believe Lowe’s Steak Sauce will be an economic opportunity for CompanyKraft as well.Our investors have expressed an interest in acquiring Lowry and we are now actively considering any alternative acquisition in any way that can offer Lowry better quality and taste and not risk the expense of acquiring Lowry.
A.1 Case, 2006: Lowry’s Steak Sauce
A.1 Case & Company. This IPO was initiated in order to evaluate available market research. Lowry currently makes available this product to more than 3,500,000 consumers in its stores who are in the United States; it consists of three sauces under its name, and its market share in the retail retail market in the United States is over 37 percentage points higher than that of the non-refurbished A.1 Case. We believe in Lowry’s ability to serve consumers well, to be a profitable brand in the future. In 2004, our principal focus was a wide range of sauces and specialties, including Steak Sauce, which includes a variety of Steaks for Kids® and Family Meal and Grilled Steak Sauce in the form of Chiles Chiles, and the Pepper Jack Steak Sauce in the form of Red Hot and Hot Pepper. In our primary focus was high-quality products and high level of customer loyalty, with prices competitive with these other products (a.1 Case, 2006b). Our primary focus in June/September 2004 was to acquire L.P. from a mutual partner (L.Y.E.) in order to increase marketing, as well as sales, prospects and success as a competitive brand in the future. This IPO was completed in October 2006. The portfolio of assets acquired and the purchase prices and market share increased during our first quarterly quarter of 2004 (i.e. in the second quarter of 2007). The purchase prices per share
Lowry’s is expected to enter a partnership with T.R.I., to acquire T.R.I. & the St. Louis Stock Exchange. This transaction is expected to generate about 1 billion (US$1.25 billion) in investment, and thus generate $2 billion in capital expenditure for the company (A.1 Case, 2005). If this partnership is successful and Lowry’s Steak Sauce can reach 1 billion customers by the end of 2005 it is anticipated that T.R.I. could generate 1 billion dollars (US$1.2 billion) through this move.
Purchasing of Lowry’s Steak Sauce from T.R.I.
We are exploring a potential partner (Cultivate) that can integrate the existing assets of its company and, if we will acquire this business to leverage it, create an even-er for CompanyKraft Steaks, which we believe will be a compelling alternative, for the same reasons why I believe Lowe’s Steak Sauce will be an economic opportunity for CompanyKraft as well.Our investors have expressed an interest in acquiring Lowry and we are now actively considering any alternative acquisition in any way that can offer Lowry better quality and taste and not risk the expense of acquiring Lowry.
A.1 Case, 2006: Lowry’s Steak Sauce
A.1 Case & Company. This IPO was initiated in order to evaluate available market research. Lowry currently makes available this product to more than 3,500,000 consumers in its stores who are in the United States; it consists of three sauces under its name, and its market share in the retail retail market in the United States is over 37 percentage points higher than that of the non-refurbished A.1 Case. We believe in Lowry’s ability to serve consumers well, to be a profitable brand in the future. In 2004, our principal focus was a wide range of sauces and specialties, including Steak Sauce, which includes a variety of Steaks for Kids® and Family Meal and Grilled Steak Sauce in the form of Chiles Chiles, and the Pepper Jack Steak Sauce in the form of Red Hot and Hot Pepper. In our primary focus was high-quality products and high level of customer loyalty, with prices competitive with these other products (a.1 Case, 2006b). Our primary focus in June/September 2004 was to acquire L.P. from a mutual partner (L.Y.E.) in order to increase marketing, as well as sales, prospects and success as a competitive brand in the future. This IPO was completed in October 2006. The portfolio of assets acquired and the purchase prices and market share increased during our first quarterly quarter of 2004 (i.e. in the second quarter of 2007). The purchase prices per share
A.1. portfolio is budgeting to grow by 10% in operating profitsCurrently holds 54% share of marketCurrent line of Marinades is not profitableMarinade profits are increasing, but still net negativeThe marinade line has 10% of market shareMarinade category growing by 15% each yearPublix wants A.1. Steak Sauce to match Lowry’s promotional pricing so they can keep the ad space10% of yearly sales are sold each holiday weekA.1. customers are very brand loyalCurrent variable cost of $0.60 per unit (A.1. Case, 2004)Sell to retailers for $3.49 (Exhibit A)High contribution margins – 482% Markup on cost for A.1Variable Marketing Expenses: